GuruFocus - Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Titan Co Ltd (BOM:500114) reported a strong growth performance in Q2 FY25, particularly in the jewelry segment.
- The company experienced healthy buyer growth in studded jewelry, with double-digit growth across price bands.
- Wedding jewelry demand has picked up following the custom duty reduction announcement, indicating positive consumer sentiment.
- The analog watch segment is seeing good growth due to strong product design, innovation, and premiumization.
- Titan's international business and emerging segments like eye care and perfumes are performing well, contributing to the overall positive outlook.
- The jewelry segment faced a 270 basis point drop in margins due to a weaker studded mix and higher gold component purchases.
- The demand for large carat solitaire stones is under pressure due to price uncertainties and international demand-supply issues.
- The company has adjusted its FY25 margin guidance for jewelry to 11% to 11.5%, down from the previous 11.5% to 12.5%.
- Competitive intensity in the gold segment has increased, leading to more aggressive pricing strategies.
- The impact of the custom duty reduction resulted in a significant one-time loss, affecting the company's financials.
A: Ajoy Chawla, CEO of Jewellery, explained that the margin growth was influenced by a one-time custom duty loss, a higher gold component due to a gold rush, and a lower-than-expected studded mix. Marketing investments also played a minor role.
Q: What is the outlook for jewelry demand, especially for wedding and festive seasons?
A: Ajoy Chawla noted that consumer sentiment is positive, with strong demand for wedding jewelry post-custom duty reduction. The festive season also showed excellent sentiment, and the company expects a good run for the next two quarters.
Q: How is the company approaching the lab-grown diamond market?
A: Coimbatore Venkataraman, Managing Director, stated that Titan is observing the market and consumer interest in lab-grown diamonds. The company is not seeing significant inquiries for lab-grown diamonds and will announce any strategic moves when ready.
Q: What are the expectations for EBIT margins in FY25?
A: Ashok Sonthalia, CFO, indicated that the expected EBIT margin for FY25 is between 11% and 11.5%, slightly lower than the previous guidance of 11.5% to 12.5%, due to the current market conditions.
Q: How is the competitive landscape affecting Titan's pricing strategy, especially with high gold prices?
A: Ajoy Chawla mentioned that competitive intensity has increased, leading Titan to adjust its discount strategy, balancing between making charges and gold rate discounts to remain competitive while managing overall payouts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.